US SEC Approves NYSE Corporate Governance Amendments

On November 25, 2009, the Securities and Exchange Commission approved amendments to the New York Stock Exchange’s corporate governance listing standards that the NYSE filed with the SEC on August 26, 2009, and amended on September 10, 2009. See Release No. 34-61067 at http://www.sec.gov/rules/sro/nyse/2009/34-61067.pdf. The SEC approved the rule changes as proposed by the NYSE. The amended rules will take effect on January 1, 2010.

The rule changes include:

• Eliminating NYSE requirements that are similar to existing SEC requirements that are contained in Item 407 of Regulation S-K, and incorporating the applicable requirements of Item 407 into Section 303A of the NYSE Listed Company Manual
  
  
  • For example, replacing the reference to disclosure of categorical standards for independence with a reference to the disclosure requirements of Item 407(a) of Regulation S-K (which requires a description by specific category or type of transactions, relationships or arrangements that were considered in making an independence determination);
    
    
• Permitting more extensive use of a company’s web site, as opposed to a proxy statement or an annual report, to disclose, among other matters, the director chosen to preside at executive sessions and the method for interested parties to communicate directly with the presiding director or the non-management or independent directors as a group;
  
  
• Eliminating the requirement for a listed company to state in its proxy statement or annual report that corporate governance documents posted on its web site are available in print to any shareholder who requests them;
  
  
• Eliminating the requirement for a listed company to disclose in its annual report that its chief executive officer filed the certification regarding compliance with the NYSE’s corporate governance listing standards and that the company filed the chief executive officer and chief financial officer certifications required by the SEC;
  
  
• Requiring the chief executive officer to notify the NYSE in writing after any executive officer becomes aware of any non-compliance with NYSE corporate governance listing standards, even if not material;
  
  
• Allowing a listed company to hold regular executive sessions of independent directors as an alternative to executive sessions of non-management directors;
  
  
• Clarifying that a company must disclose a method for all interested parties, not just shareholders, to communicate their concerns to the presiding director or to the non-management or independent directors as a group;
  
  
• Requiring disclosure of a board’s determination, if applicable, that an audit committee member’s service on more than three public company audit committees would not impair that director’s ability to serve on the listed company’s audit committee, even if the company does not limit audit committee members to serving on three or fewer public company audit committees;
  
  
• Permitting disclosures to be incorporated by reference into a company’s proxy statement or annual report from another document filed with the SEC, if permitted by SEC rules; and
  
  
• Modifying transition periods for newly listed companies.

For a more detailed discussion of the NYSE’s corporate governance amendments see our Securities Update titled “NYSE Proposes Changes to its Corporate Governance Rules.”